Former postal affairs minister Pat McFadden has told the Horizon IT inquiry “of course I wish I had done more” to ask the Post Office if the faulty system was “as robust as they suggested”.

The Labour MP and current Chancellor for the Duchy of Lancaster urged the probe not to recommend making ministers “shadow chief executives” to prevent the bosses of state-owned companies going “rogue” following the scandal.

Mr McFadden instead said it was worth considering the implementation of an independent body “that can be called in to launch an inquiry or take action when the level of allegations reaches such a point that it looks like that is the right thing to do”.

He said ministers “do not intervene in court judgments and cannot overturn court verdicts” after telling the probe the company’s actions resulted in “innocent people being convicted”.

Mr McFadden, who was postal affairs minister between 2007 and 2009, said he does not believe he spoke to then business secretary John Hutton about allegations made by subpostmasters about the integrity of the faulty system.

Of course I wish I had done more to ask the Post Office if they were really sure their IT system was as robust as they suggested

He told the inquiry that the “ultimate responsibility” for a state-owned company such as the Post Office lies “with the Government”, but said he does not recall officials telling him that “they thought a miscarriage of justice was under way”.

The Labour MP for Wolverhampton South East said he was first made aware that the Post Office was prosecuting subpostmasters for alleged shortfalls at their branches in February 2009.

More than 700 subpostmasters were prosecuted by the Post Office and handed criminal convictions between 1999 and 2015 as Fujitsu’s faulty Horizon system made it appear as though money was missing at their branches.

Offering his reflections on the scandal in his witness statement which was published on Thursday, Mr McFadden said: “Rereading this correspondence now, and knowing the injustice done to so many subpostmasters, of course I wish I had done more to ask the Post Office if they were really sure their IT system was as robust as they suggested.

“Yet if I had done so, I suspect they would have continued to insist that it was not to blame for these accounting errors and they would have continued to use the court judgments as proof points.

“That was what they said in all the replies at the time in very strong terms and was the position they maintained for years afterwards.

“It was only through pursuing appeals and litigation through the courts that the truth emerged and convictions were overturned as unsafe.

“It is only now, 14 years on from my time in office, that Parliament has taken the unprecedented step of legislating to overturn the remaining cases which have not been otherwise dealt with through the courts.”

Questioned on his thoughts for how state-owned companies could be better managed in the wake of the scandal, the Labour MP said: “I think there’s going to be a temptation on your (the inquiry’s) part, because of what went wrong here, to have ministers as sort of shadow chief executives of these bodies.

“I think, in the short term, there will be a chair for that because people will say this arm’s length body, this publicly owned company, engaged in unsigned prosecutions of its own staff effectively… and of course the consequences for them were awful.

“I’m not sure in practice, given the number of arm’s length bodies there are, that ministers really can act as shadow chief executives of them.

“Which begs the question, what do you do when one goes rogue? If it’s not a minister sitting on a chief executive’s shoulder, what is it?

“I wonder if it’s worth considering some sort of body that’s established to do precisely this, that can be called in to launch an inquiry or take action when the level of allegations reaches such a point that it looks like that is the right thing to do.

“I think this is a live and real policy question which has been exposed by this scandal and I’m glad you’re considering it going forward but I’m not sure making ministers shadow chief executives is going to be the practical way to do this.”

Mr McFadden told the probe he believed officials had not told him of a miscarriage of justice because the Post Office’s replies to queries about the system were that it was robust.

His statement continued: “I have no evidence or reason to believe that the officials in the department were receiving any information different to that set out in the replies from the Post Office.

“Ministers are reliant on the information they get from officials.

“At no point do I recall officials saying to me that they did not believe these replies or that they thought a miscarriage of justice was under way.

“I expect this was because they were being told the same thing by the Post Office, as was set out in the replies.”

Concluding his statement, Mr McFadden said: “At the root of all this was the Post Office’s insistence that its IT system was robust and not to blame for accounting errors and their willingness to bring prosecutions through the courts over many years.

“This resulted in many innocent people being convicted or being held liable for debts they did not owe in the civil courts.

“Ministers do not intervene in court judgments and cannot overturn court verdicts.

“The separation of powers between the legislature and the judicial system is valued by all governments.”

He said a handover note given to him when he took on the role of postal affairs minister “did not mention anything” in relation to subpostmasters’ complaints about the system.

Mr McFadden said an email from a Computer Weekly journalist asking for comment on allegations made by subpostmasters was also the first time he was made aware of Post Office prosecutions and of complaints regarding the manner in which the company conducted its investigations.

During his evidence, counsel to the inquiry Sam Stevens asked Mr McFadden: “Where does ultimate accountability for the actions of an arm’s length body such as the Post Office, that is owned by the Government, lie?”

He replied: “I’ve thought about this a lot because of this issue and this whole question of the arm’s length relationship and what happens when that goes wrong and what you can do about it.

“If it’s state-owned, ultimately the accountability will lie with the Government because it’s state-owned.

“But I do want to stress that the legislation that had been passed and the Postal Services Act had deliberately created this separation.”

Hundreds of victims are awaiting compensation despite the previous Government announcing that those who have had convictions quashed are eligible for £600,000 payouts.